Q1 2026 Lightspeed Commerce Inc Earnings Call

Van: Thank you for standing by. My name is Van, and I will be your conference operator today. At this time, I would like to welcome everyone to the Lightspeed Commerce Inc. First Quarter 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Gus Papageorgiou, Head of Investor Relations. Please go ahead.

Thank you for standing by my name is that and I will be a conference operator today at this time.

Time, I would like to welcome everyone to the Lightspeed first quarter blended 26 earnings call all.

All lines have been placed on mute to prevent any background noise.

They're just speakers remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star one again.

Thank you I would now like to turn the call over to Gasp I argue head of Investor Relations. Please go ahead.

Gus Papageorgiou: Thank you, operator, and good morning, everyone. Welcome to Lightspeed's fiscal Q1 2026 conference call. Joining me today are Dax Dasilva, Lightspeed's founder and CEO; Asha Bakshani, our CFO; and Jean-David Saint-Martin, our President. After prepared remarks from Dax and Asha, we will open it up for your questions. We will make forward-looking statements on our call today that are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Certain material factors and assumptions were applied in respect of conclusions, forecasts, and projections contained in these statements. We undertake no obligation to update these statements except as required by law. You should carefully review these factors, assumptions, risks, and uncertainties in our earnings press release issued earlier today, our first quarter fiscal 2026 results presentation available on our website, as well as in our filings with U.S. and Canadian securities regulators.

Thank you operator, and good morning, everyone welcome to Lightspeed fiscal Q1 2026 conference call.

With me today are Dax, Dasilva, <unk>, founder and CEO Astrachan shiny, our CFO and J D.

Our president after prepared remarks from Dax Nash out we will open it up for your questions.

We will make forward looking statements on our call today that are subject to risks and uncertainties that could cause actual results to differ materially from those projected.

Certain material factors and assumptions were applied in respect of conclusions forecasts and projections contained in these statements. We undertake no obligation to update these statements except as required by law.

Should carefully review these factors assumptions risks and uncertainties in our earnings press release issued earlier today.

First quarter fiscal 2026 results presentation available on our website as well as in our filings with U S and Canadian Securities regulators.

Gus Papageorgiou: Also, our commentary today will include adjusted financial measures, which are non-IFRS measures, and ratios. These should be considered as a supplement to and not a substitute for IFRS financial measures. Reconciliations between the two can be found in our earnings press release, which is available on our website, on Cedar Plus, and on the SEC's Acura System. Note that because we report in U.S. dollars, all amounts discussed today are in U.S. dollars unless otherwise indicated. With that, I will now turn the call over to Dax.

Also our commentary today will include adjusted financial measures, which are non <unk> measures and ratios.

Should be considered as a supplement to and not a substitute for <unk> financial measures.

Reconciliations between the two can be found in our earnings press release, which is available on our website and cedar plus and on the SEC Edgar system.

Note that because we report in US dollars all amounts discussed today are in U S dollars unless otherwise indicated.

I will now turn the call over to Dax. Thank you guys and good morning, everyone.

Dax Dasilva: Thank you, Gus, and good morning, everyone. Last year, we made the strategic decision to focus Lightspeed on two core growth engines: retail in North America and hospitality in Europe. These are markets where we have a proven right to win, strong product-market fit, and significant headroom for growth. We refocused our product roadmap, revamped our go-to-market strategy, and aligned our organization to execute on that strategy. That strategy is working. Our Q1 results speak for themselves. Revenue of $305 million increased 15% year over year and exceeded the high end of our outlook. Gross profit of $129 million increased 19%, also significantly above our outlook of 13%. Payments penetration reached 41%, up from 36% in the same quarter last year. Adjusted EBITDA came in at $16 million, up 55% year over year.

Last year, we made the strategic decision to focus light speed on two core growth engines retail in North America and hospitality in Europe.

These are markets, where we have a proven right to win strong product market fit and significant headroom for growth.

We refocused our product roadmap revamped our go to market strategy and aligned our organization to execute on that strategy.

That strategy is working our Q1 results speak for themselves.

Revenue of $305 million increased 15% year over year and exceeded the high end of our outlook.

Gross profit of $129 million increased 19% also significantly above our outlook of 13%.

Payments penetration reached 41% up from 36% in the same quarter last year.

Adjusted EBITDA came in at $16 million up 55% year over year.

Dax Dasilva: We added approximately 1,700 net new customer locations in our growth engines in the quarter, with total growth engine locations up 5% year over year. Total locations at the end of the quarter were approximately 145,000 and were up year over year. This morning, I want to share how we are progressing against the three strategic priorities we laid out at our capital markets day. As a reminder, those priorities are: one, growing customer locations in our growth engines; two, expanding subscription ARPU; and three, improving adjusted EBITDA and free cash flow. On growing customer locations, at capital markets day, we committed to growing customer locations in our core growth engines, North American retail and European hospitality, with a targeted three-year customer location CAGR of 10% to 15%.

And we added approximately 1700 net new customer locations in our growth engines in the quarter.

With total growth engine locations up 5% year over year.

Total locations at the end of the quarter or approximately 145000 and were up year over year.

This morning, I want to share how we are progressing against the three strategic priorities, we laid out at our capital markets day.

As a reminder, those priorities are one growing customer locations and our growth engines to expanding subscription of RPM and three improving adjusted EBITDA and free cash flow.

On growing customer locations at capital markets day, we committed to growing customer locations in our core growth engines, North American retail and European hospitality with a targeted three year customer location CAGR of 10% to 15%.

Dax Dasilva: In Q1, total growth engine locations were up 5% year over year, with approximately 1,700 net new customer locations added in the quarter, a clear acceleration from 3% last quarter. As our go-to-market and product investments continue to scale, this location growth will converge towards the 10% to 15% target we laid out during the CMD. Overall, customer location count was net positive for the quarter. Location growth was driven by a go-to-market engine that is becoming best in class, anchored in disciplined funnel management across both outbound and inbound channels. Outbound-driven bookings more than doubled year over year for our growth engines, and we now have over 130 of our 150 planned outbound reps in seat, the majority of which are still ramping, as it takes approximately six months for an outbound rep to become fully productive.

In Q1 total growth engine locations were up 5% year over year with approximately 1700 net new customer locations added in the quarter, a clear acceleration from 3% last quarter.

As our go to market and product investments continued to scale dislocation growth will converge towards 10% to 15% target we laid out during the CMT overall.

Overall customer location count was net positive for the quarter.

Location growth was driven by a go to market engine, it's becoming best in class anchored anticipant funnel management across both outbound and inbound channels.

Outbound driven bookings more than doubled year over year for our growth engines and we now have over 130 of our 150 planned outbound reps in seat.

The majority of which are still ramping as it takes approximately six months for an outbound rep to become fully productive.

Dax Dasilva: We also had a strong quarter in vertical brand marketing, growing our presence in trade shows and customer events. Thanks to our strong outbound and vertical brand marketing efforts, we are seeing a halo effect on inbound, with inbound bookings up 15% year over year. We had many notable customer wins this quarter. In retail, we added premium streetwear retailer Last Stop, with 10 locations in Maryland and Virginia, Shades of Charleston, a four-location eyewear retailer in South Carolina. Within the order by Lightspeed, we added Neiman Marcus and Bergdorf Goodman and marquee brands Fabletics and Tory Burch, displacing key competitors and reinforcing our position as a dominant B2B platform in retail. In golf, we signed Western Golf Properties, with 11 locations in California and Nevada. In hospitality, we added Le Petit Chaise, the oldest restaurant in Paris, and The Pole, a two-Michelin star restaurant in Amsterdam.

We also had a strong quarter in vertical brand marketing growing our presence in tradeshows and customer events. Thanks to our strong outbound and vertical brand marketing efforts, we are seeing a halo effect on inbound with inbound bookings up 15% year over year.

We had many notable customer wins this quarter in retail we added premium Street wear retailer last stop with 10 locations in Maryland and Virginia.

The Charleston, a foreign location of eyewear retailer in South Carolina.

Within the order by Lightspeed, we added Neiman, Marcus and Bergdorf Goodman, and marquee brands Athletics, and Tory Burch, displacing key competitors and reinforcing our position as the dominant platform in retail and.

And in golf, we signed Western golf properties with 11 locations in California, and Nevada.

Hospitality, we added the BT chess the oldest restaurant in Paris.

And the poll of two Michelin star restaurants and Amsterdam.

Dax Dasilva: The Corrigan Collection, with seven locations across the U.K. and Ireland by Michelin starred chef Richard Corrigan. On driving software revenue and ARPU, Q1 software revenue grew 9% year over year, and software ARPU increased 10%, driven by product innovation as well as sales of our flagships, primarily to retail customers in North America and hospitality customers in Europe. In retail, we launched custom inventory adjustments, allowing for detailed tracking of stock changes. We added inventory turns and a gross margin return on investment metric within Retail Insights. We further improved the Lightspeed Scanner App to allow for product search, inventory checks, and pricing. Within the order by Lightspeed, we launched Order Trends that helps merchants identify the top-selling products by brand. Early adopters have seen a 10% increase in average order value.

And the Corrigan collection with seven locations across the UK and Ireland by Michelin Star Chef Richard Corrigan.

On driving software revenue at RPM.

Q1 software revenue grew 9% year over year and software <unk> increased 10% driven by product innovation as well as sales of our flagships, primarily to retail customers in North America and hospitality customers in Europe.

In retail, we launched customer inventory adjustments, allowing for detailed tracking of stock changes.

Added inventory turns and a gross margin return on investment metric within retail insights.

We further improved the laser scanner app to allow for product search inventory checks and pricing and.

And within your order by Lightspeed, we launched order trends that helps merchants identify the top selling products by brands earlier.

Early adopters have seen a 10% increase in average order value.

Dax Dasilva: In hospitality, we launched our AI-powered benchmarks and trends in Europe, giving restaurateurs visibility into how their performance compares to peers by region, cuisine, and price point, a feature already proven in North America. We rolled out Mobile Tap on Lightspeed Tableside in the U.K., Netherlands, and Belgium, improving table turnover and service speed. We further enhanced the Lightspeed Kitchen Display System with features such as prep insights and menu updates and added deeper insights to the Lightspeed Pulse app, such as best sellers and top staff. We introduced a new sales report dashboard, consolidating all key metrics into a customizable real-time view to help operators plan smarter and optimize margins. This kind of innovation, tailored to high-value merchant needs, helps drive higher win rates, ARPU expansion, and grow customer lifetime value.

At hospitality, we launched our AI powered benchmarks and trends in Europe, given restauranteurs visibility into how their performance compares to peers by region cuisine and price points feature already proven in North America.

We rolled out mobile tap on Lightspeed table side in the UK, Netherlands, and Belgium, improving table turnover and service speed.

We further enhanced kitchen display system with features such as prep insights and menu updates and added deeper insights to light C pulse app, such as best sellers and top staff.

And we introduced a new sales report dashboard consolidating all key metrics into our customizable real time view to help operators plan spider and optimize margins.

This kind of innovation tailored to high value merchant needs helps drive higher win rates, our pool expansion and grow customer lifetime value.

Dax Dasilva: On expanding profitability, Asha will walk through the numbers in more detail, but I want to underscore a few things. First, Lightspeed continues to deliver strong software gross margins of 81%, a reflection of the mission-critical nature of our platform. Our customers run established businesses, and they value technology that helps them manage their inventory, organize staff, access capital, and improve the customer experience. That value is evident in both our industry-leading software margins and our other growth metrics. Second, our adjusted EBITDA performance in Q1 of $16 million increased 55% year over year and is a clear sign that our model is working. Importantly, we were able to significantly improve adjusted EBITDA while continuing to invest in outbound sales, vertical marketing, and in product and technology. We're proving that Lightspeed can invest meaningfully in growth while improving profitability.

On expanding profitability.

Actual walk through the numbers in more detail, but I want to underscore a few things.

Lightspeed.

Lightspeed continues to deliver strong software gross margins of 81% a reflection of the mission critical nature of our platform.

Our customers run established businesses and they value technology that helps them manage their inventory organize staff access capital and improve the customer experience.

That value is evident in both our industry, leading software margins and our other growth metrics.

Second our adjusted EBITDA performance in Q1 of $16 million increased 55% year over year and is a clear sign that our model is working.

Accordingly, we were able to significantly improve adjusted EBITDA, while continuing to invest in outbound sales vertical marketing and in product and technology.

We're proving that lightspeed can invest meaningfully and growth while improving profitability.

Dax Dasilva: In closing, we laid out a bold strategy, and in Q1, we delivered. I want to thank the entire Lightspeed team for a strong start to fiscal 2026. With that, I'll turn it over to Asha.

In closing, we laid out a bold strategy and in Q1, we delivered.

I want to thank the entire <unk> team for a strong start to fiscal 2006.

With that I'll turn it over to Tasha.

Asha Bakshani: Thanks, Dax, and welcome, everyone. Lightspeed had a great start to the year, with revenue and gross profit coming in well ahead of our initial outlook, thanks largely to expanding locations within our growth markets, increasing software ARPU, strong payments penetration, and relentless operating efficiency, which is now a part of the Lightspeed DNA. I will walk you through a detailed look at our financials and then provide our Q2 and fiscal 2026 outlook. Total revenue grew 15% ahead of our outlook, driven by software ARPU expansion and increasing payments penetration. Revenue growth was primarily generated by our growth markets of North America retail and European hospitality, as more and more customers move on to our platforms and attach new software modules. In addition, we benefited from improving same-store sales thanks to a more stable macro environment.

Thanks, Jack and welcome everyone Lightspeed had a great start to the year with revenue and gross profit coming in well ahead of our initial outlook, thanks, largely to expanding locations within our gross market increase.

Increasing software.

Strong payments penetration and relentless operating efficiency, which is now a part of the Lightspeed DNA.

I will walk you through a detailed look at our financials and then provide our Q2 and fiscal 2026 outlook.

Total revenue grew 15% ahead of our outlook driven by software arm, who expansion and increasing payments penetration.

Revenue growth was primarily generated by our growth markets of North America, retail and European hospitality as more and more customers move onto our platforms and attached news software module.

In addition, we benefited from improving same store sales, thanks to a more stable macro environment.

Asha Bakshani: Software revenue was $90.9 million, up 9% year over year, with software ARPU up 10% year over year. Software ARPU increased due to new software releases, along with the benefit of pricing actions taken last year. Transaction-based revenue was $204.6 million, up 18% year over year. Gross payments volume grew 21% year over year, and capital revenue grew 34% year over year. Gross payments volume, as a percentage of gross transaction volume, came in at 41%, up from last quarter and year over year. Overall GTV grew by 4% to $24.6 billion, and total average GTV per location continued to climb as we continued to sign more high-value customers. We saw GTV in our growth engines accelerate this quarter to 12% year over year, with growth engine locations up by 5% year over year.

Software revenue was $99 million up 9% year over year, when software are up 10% year over year.

Software arm to increased due to new software releases, along with the benefit of pricing actions taken last year.

Transaction based revenue was $204 $6 million.

18% year over year.

Gross payments volume grew 21% year over year and capital revenue grew 34% year over year.

Gross payments volume as a percentage of gross transaction volume came in at 41% up from last quarter and year over year.

Overall GTD grew by 4% to $24 6 billion and total average GTP per location continues to decline as we continue to sign more high value customers with.

We saw G. T V in our growth engines accelerated this quarter to 12% year over year with growth engine locations up by 5% year over year.

Asha Bakshani: ARPU reached a record $655, up 16% year over year, driven by both higher software and payments monetization. ARPU grew across both our growth and efficiency markets, with growth markets outpacing the overall average. ARPU in our growth markets is higher than our efficiency markets, and as those locations grow, I expect it to have a positive influence on overall ARPU. With respect to profitability and operating leverage, total gross profit grew 19% year over year, exceeding both revenue growth and our 13% outlook, driven by strong top-line performance and expanding gross margins in both subscription and transaction-based revenues. Q1 gross profit benefited from new software modules released last year, as well as the price increases that were put through mid-last year. Total gross margin was 42%, up from 41% last year.

Our total reached a record $655 up 16% year over year, driven by both higher software and payments monetization.

ARPA grew across both our growth and efficiency markets with growth markets outpacing the overall average.

<unk> and our gross margin is higher than our efficiency market and then those locations grow I expect it to have a positive influence on overall ARPA.

With respect to profitability and operating leverage.

<unk> gross profit grew 19% year over year exceeding both revenue growth and 13% outlook driven by strong top line performance and expanding gross margins in both subscription and transaction based revenues.

Q1 gross profit benefited from new software modules released last year as well as the price increases that were put through mid last year.

Total gross margin was 42% up from 41% last year display.

Asha Bakshani: Despite transaction-based revenue increasing to 67% of sales from 65% of sales last year, gross margins improved through initiatives including effective spend management and the growth in higher margin revenue, such as Lightspeed Capital. We delivered strong software margins of 81%, up from 79% a year ago, largely driven by cost discipline. Gross margins for transaction-based revenue were 29%, up from 26% last year. This improvement reflects growth in our capital business and the expansion of payments in international markets, where margins exceed those in North America. As we convert customers to Lightspeed Payments, we increase our overall net gross profit dollars, and in the quarter, we saw transaction-based gross profit grow 30% year over year.

Despite transaction based revenue increasing to 67% of sales from 65% of sales last year gross margin improved through initiatives, including in fact didn't spend management and the growth in higher margin revenues, such as slides and capital.

We delivered strong software margins of 81% up from 79% a year ago, largely driven by constant discipline.

Gross margins for transaction based revenues were 29% up from 26% last year.

This improvement reflects growth in our capital business and the expansion of payments in international markets, where margins exceed those in North America.

As we convert customers to lightspeed payments, we increased our overall net gross profit dollars and in the quarter. We saw transaction based gross profit growth, 30% year over year.

Asha Bakshani: Total adjusted R&D, sales and marketing, and G&A expenses grew 15% year over year, primarily due to meaningful investments we are making in field and outbound sales, as well as product innovation in our growth engine. Adjusted EBITDA in the quarter came in at $15.9 million, increasing 55% from the $10.2 million we delivered in Q1 last year, driven by continued success from our strategic shift and our relentless focus on operating efficiency. Adjusted free cash flow is nearing breakeven and came in at $1.7 million used in the quarter. Free cash flow adjusts for cash related to our merchant cash advance business and includes our capital expenditures. We continue to actively manage our share-based compensation and related payroll taxes, which were $14 million, or 5% of revenue for the quarter, versus $11.7 million, or 4% of revenue in the same quarter last year.

Total adjusted R&D sales and marketing and G&A expenses grew 15% year over year, primarily due to the meaningful investments, we're making in field and outbound sales as well as product innovation and our growth engine.

Adjusted EBITDA in the quarter came in at $15 9 million, increasing 55% from the $10 $2 million. We delivered in Q1 last year driven by continued success from our strategic shifts and our relentless focus on operating efficiency.

Adjusted free cash flow is nearing breakeven and came in at $1 $7 million used in the quarter.

Free cash flow adjusted for cash related to our merchant cash advance business and includes our capital expenditures.

We continued to actively manage our share based compensation and related payroll taxes, which were $14 million or 5% of revenue for the quarter versus $11 7 million or 4% of revenue in the same.

Quarter last year.

Asha Bakshani: We continue to manage equity usage prudently. With respect to capital allocation and our balance sheet, we completed our fiscal 2026 normal course issuer bid of approximately 9 million shares, returning $85 million back to shareholders in our first quarter. In addition, we opportunistically used $30 million to repurchase our stock in the open market to fund future RSU settlement obligations, limiting share dilution upon settlement. Excluding these two items, which were elective, our cash balance would have increased over the previous quarter. We ended Q1 with approximately $448 million in cash. Approximately $200 million remains under our broader board authorization to repurchase up to $400 million in Lightspeed shares, and we continue to be opportunistic on further share repurchases. Our balance sheet remains healthy and positions us well as we continue our strategic focus.

We continue to manage equity usage prudently.

With respect to capital allocation and our balance sheet, we completed our fiscal 2026 normal course issuer bid of approximately 9 million shares returning $85 million back to shareholders in our first quarter.

In addition, we opportunistically used $30 million to repurchase our stock in the open market to fund future R&D <unk> settlement obligations limiting share dilution upon settlement.

Excluding these two items, which were elected our cash balance would have increased over the previous quarter.

We ended Q1 with approximately $448 million in cash.

Approximately $200 million remaining under our broader board authorization to repurchase up to $400 million in lightspeed shares and we continue to be opportunistic on further share repurchases, our balance sheet remains healthy and positions us well as we continue our strategic.

Focus.

Asha Bakshani: With respect to our efficiency market, we continue to retain revenue, with location churn largely offset by continued strength in payments penetration, capital revenue growth, and higher ARPU. It's worth highlighting that payments penetration for these markets is 35%, below our global average, which we view as a meaningful opportunity. We believe there's strong potential to increase adoption amongst these customers. Now, turning to our outlook. Despite a fluid macro environment, we maintain strong conviction in our strategy and ability to execute. This financial outlook is consistent with our targeted three-year gross profit CAGR of approximately 15% to 18% and our three-year adjusted EBITDA CAGR of approximately 35% that we presented at our capital markets day in March.

With respect to our efficiency market, we continue to retain revenue with location churn largely offset by continued strength in payments penetration capital revenue growth and higher ARPA.

It's worth highlighting that payments penetration for these market is 35% below our global average, which we view as a meaningful opportunity. We believe there's strong potential to increase adoption amongst these customers.

Now turning to our outlook.

Despite a fluid macro environment, we maintained strong conviction in our strategy and ability to execute.

This financial outlook is consistent with our targeted three year gross profit CAGR of approximately 15% to 18%.

Our three year adjusted EBITDA CAGR of approximately 38% that we presented at our capital markets day in March.

Asha Bakshani: For the second quarter, we expect total revenue in the range of approximately $305 to $310 million, total gross profit growth of approximately 14% year over year, total adjusted EBITDA to be in the range of approximately $17 to $19 million. For fiscal 2026, we continue to expect revenue growth of approximately 10% to 12% year over year, gross profit growth of approximately 14% year over year, and adjusted EBITDA to be in the range of approximately $68 million to $72 million. With that, I'll turn the call back to the operator.

For the second quarter, we expect total revenue in the range of approximately $305 million to $310 million.

Total gross profit growth of approximately 14% year over year.

Total adjusted EBITDA to be in the range of approximately $17 million to $19 million.

For fiscal 2026, we continue to expect revenue growth of approximately 10% to 12% year over year gross profit growth of approximately 14% year over year and.

And adjusted EBITDA to be in the range of approximately $68 million to $72 million.

With that I'll turn the call back to the operator.

Van: At this time, I would like to remind everyone, in order to ask a question, press star then the number 1 on your telephone keypad. Please limit your questions to one and one follow-up. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Dan Perlin from RBC Capital Markets. Please go ahead.

At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad. Please.

Please limit your questions to one and one follow up we will pause for just a moment to compile the Q&A roster.

Your first question comes from the line of Dan Perlin from RBC capital markets. Please go ahead.

Speaker 6: Thanks. Good morning, and good to see the results kind of trending in line with the strategy here. The question I have around subscription revenue growth of 9%, I think subscription ARPU kind of 10% growth. Sounds like the pricing initiatives from last year were a part of that incremental growth versus, let's say, location growth. I am wondering if you could just speak to how much of an opportunity that you might still see within the pricing metrics that you have when you think about incremental new signings, as well as maybe some of the backlog. Thank you.

Thanks, Good morning, and good to see the results kind of trending in line with the strategy here. The question I have around subscription revenue growth of nine I think subscription <unk>.

Kind of 10% growth sounds like you know the pricing initiatives from last year were part of that.

Incremental growth versus I'll say location growth. So I'm wondering if you could just speak to it.

Much of an opportunity that you might still see within the pricing.

Metrics that you have when you think about incremental new signings as well as maybe some tobacco. Thank you.

Dax Dasilva: Thanks for the question. So, yeah, we view the 9% software growth in Q1 as a solid result. You know, we saw 7% last fiscal year. Ultimately, subscription revenue is tied to new customer adds, where we showed location growth in our growth engines this quarter. Really, really excited to show that momentum, as well as product adoption. Both of these are trending in the right direction. We did see the impact of price increases this quarter from last fiscal year that are rolling through this fiscal year. That said, our growth engines are growing. We are seeing stronger ARPU, and we made large investments in sales and product. We will see software growth continue to grow. It will not be overnight, but we are definitely headed in the right direction.

Thanks for the question.

So yeah, we view the 9% software growth.

In Q1 is a solid result, we saw 7% last fiscal year.

Ultimately subscription revenues is tied to new customer ads, where we showed location growth and our growth engines. This quarter really really excited to show that momentum as well as product adoption.

Both of these are trending in the right direction. So we did see the impact of price increases this quarter from last fiscal year that are rolling through this fiscal year.

But that said our growth engines are growing we're seeing stronger ARPA or we've made.

Large investments in sales and product and.

And so we will see software software growth continue to grow it won't be overnight, but we're definitely headed in the right in the right direction.

Speaker 6: Yep. Just a quick follow-up, in particular on the new location growth, also very good to see that 5% year over year. You did talk about, I guess, expecting that to continue to ramp towards, let's say, the 10% growth rate over time. I am wondering if you have any kind of contextual expectations about the duration it might take in order to achieve kind of the double-digit growth rates there. Thank you.

Yep.

And then just a quick follow up in particular on the new location growth also very good to see that 5% year over year you.

You did talk about I guess expecting that to continue to ramp towards let's say the 10% growth rate.

Over time I'm wondering if you have any kind of contextual expectations about the duration it might take in order to achieve the double digit growth rates there. Thank you.

Dax Dasilva: Yeah, the CAGR is for three years. So, you know, we'll see that growth rate for locations converge towards 10% to 15% towards fiscal 2028. But yeah, I believe we're off to a strong start in the growth engine. This is our first quarter of the transformation. We are ramping our sales organization. So we have 130 of the 150 outbound reps in seat. Many of them are ramping towards going towards full quota. We're also seeing from all the outbound efforts and vertical brand marketing efforts, a halo effect on inbound. So we're feeling positive about location growth. In addition to the investments we're making in the sales organization, we're making a significant investment in product and technology in the growth engines. That's being funded by efficiency and funds from the efficiency market.

The CAGR for three years, so, we'll see that that that growth rate for locations converge towards 10% to 15%.

Towards fiscal 2008, but yet where I believe we are off to a strong strong starting with the growth engine.

And this is our first quarter of the transformation, we are ramping our sales organization. So we have 130 of the 150 outbound reps in seat.

Many of them are ramping towards being you know.

Towards full quota.

We're also seeing from the outbound all the efforts in vertical brand marketing efforts, a halo effect on inbound. So we we're feeling positive about our about location growth. In addition to the investments we're making in the sales organization, we're making.

Significant investment in product and technology and the growth engines, that's being funded by efficiency and.

And and and.

Funds from the from the efficiency market.

Dax Dasilva: So that all is going to pay off in the quarters to come and result in further location growth.

That all is going to is going to pay off in the quarters to come.

And as a result in further location growth.

Van: Can we go to the next question, please? Our next question comes from the line of Trevor Williams from Jefferies. Please go ahead.

And can we go to the next question. Please.

Our next question comes from the line of Trevor Williams from Jefferies. Please go ahead.

Speaker 6: Great. Thanks very much. I just wanted to go back. Maybe we could revisit some of the upside drivers for Q1, both on revenue and gross profit. Then just in terms of the shape of the year, I think last quarter, at least with how the year had been laid out, we were kind of building to a progressive acceleration over the course of the year. Then just based on the Q1 outperformance and keeping kind of the full year guide where it is, it is just a slightly different shape with kind of what is implied deceleration-wise off of Q1. Just curious if there was anything unsustainable in the first quarter or if maybe now there is maybe a bit more embedded conservatism for the balance of the year. That would be helpful. Thanks.

Great. Thanks, very much I just wanted to go back maybe we could revisit some of the upside drivers for Q1, both on revenue and gross profit and then just in terms of the shape of the year I think last.

Last quarter at least with how the year had been laid out where we're kind of building to a progressive acceleration over the course of the year. Then just based on the Q1 outperformance and keeping kind of the full year guide where it is it's just a slightly different shape.

Whats kind of whats implied deceleration wise off of Q1. So just curious if there was anything unsustainable in the first quarter or if maybe now there's maybe a bit more embedded conservatism for the balance of the year that'd be helpful. Thanks.

Asha Bakshani: Thanks for the question, Trevor. I will take that one. Q1, you are right, we did see solid execution, and that is what you are seeing in the results. Our strategy is really starting to pay off. With respect to the guide, what we need to keep in mind, as Dax Dasilva just mentioned, is we are very early days in our transformation. We are four months into the year. As Dax Dasilva said, we have 130 of 150 reps in seat, but less than half of them are fully ramped. We just want to make sure that we give them the time to ramp before we start to increase the guide for the year. The guide for the year is a range. While we are confident we are trending at the high end of that range, we are not going to increase the guide at this time.

Yeah. Thanks for the question Trevor I'll take that one you know Q1 Youre right. We did see solid execution and that's what you're seeing in the results of our strategy is really starting to pay off.

But with respect to the guide what we need to keep in mind as Docs. Just mentioned is we're very early days in our transformation, we're four months into the year and you know.

That said, we have 130 of 150 reps in seat, but less than half of them are fully ramped. So we just wanted to make sure that you know that we give them the time to ramp.

Before we start to increase the guide for the year. The guide for the year is a range you know while we're confident we're trending at the high end of that range, we're not going to increase the guide at this time.

Asha Bakshani: Outside of that, really no one-time things in Q1. Dax Dasilva talked a little bit about the price increase, which we did midway through the year last year. You are seeing the full benefit of that in Q1. As our outbound reps continue to ramp, we expect this solid execution to continue.

Outside of that really no one time things in Q1, I mean, Doug talked a little bit about the price increase which we did mid way through the year last year, you're seeing the full benefit of that in Q1.

But as our outbound reps continue to ramp we expect this solid execution to continue.

Speaker 6: OK, I appreciate that. Then just any color on kind of how quarter-to-date trends have looked in July on some of the key drivers would be helpful. Thank you, guys.

Okay. I appreciate that and then just any color on kind of how quarter did they trends have looked in July on some of the key drivers would be helpful. Thank you guys.

Asha Bakshani: Yeah, we did see the macro stabilize in April in Q1, and we continue to see that in July. From an internal execution perspective, we are really excited and encouraged by what we are seeing. July continues to look a lot like the first quarter, and we are excited about the execution internally as well.

Yeah, we did see the macros stabilize in April in Q1, and we continue to see that in July.

And then from an internal execution perspective, we're really excited and encouraged by what were seeing July continues to to look a lot like the first quarter and you know we're excited about the execution internally as well.

Yeah.

Van: Your next question comes from the lines of Thanos Moschopoulos from BMO Capital Markets. Please go ahead.

Your next question comes from the lines of panels Scalpel us from BMO capital markets. Please go ahead.

Speaker 8: Hi, good morning. Can you talk about the same store sale dynamic in retail versus hospitality? Was there a meaningful difference there or were they similar?

Hi, good morning could.

Can you talk about the same store sales dynamic in retail versus hospitality or was there a meaningful difference there really similar.

Asha Bakshani: Thanks, Thanos. The same-store sales in European hospitality were better than North America retail. We actually saw double-digit growth in European hospitality and low single-digit growth in Noam retail. A part of that in Europe, however, is also FX. But from an FX neutral perspective, we did see stronger growth in same-store sales in Europe. Outside of that, no other major differences in both of those markets.

Thanks, Tom Yeah, the same store sales in European hospitality, we're better than North America retail, we actually saw double digit growth in European hospitality and low single digit growth in no I'm retail a part of that in Europe. However is also FX.

But from an FX neutral perspective, we did see stronger growth in same store sales and in Europe, but outside of that no. Other no major differences in both of those markets.

Speaker 8: Great. In terms of the vertical marketing strategy, any specific verticals you would call out where that is especially resonating, or would it just be across your main key verticals you talked about historically?

Great and then in terms of the vertical marketing strategy.

Any specific verticals you'd call out, where that's especially resonating or would it just be across.

Key verticals you've talked about historically.

Dax Dasilva: Yeah, I mean, we have our eight key verticals in retail. Some examples of some trade shows that we have done are the running shows, outdoor sports shows. We are integrated, of course, with the brands through Lightspeed New Order in those verticals. So we are pitching Lightspeed Solutions both from the merchant side as well as the brand side, and it all comes together at these trade shows. So that makes a ton of sense for Lightspeed. In addition to doing trade shows as well for European hospitality, we also did Lightspeed Edge, which was a customer event. That is one of many customer events we have planned, both sides of the pond for North American retail and EMEA Hospital.

Yeah, I mean, we have we have our eight key verticals and in retail.

Some examples of some trade shows that we've done are the running shows outdoor sports shows.

Integrated of course with the brands through new order in those verticals. So.

We're pitching lightspeed solutions, both from the merchant side as well as the brand side.

All comes together at these trade shows so that makes a ton of sense for Lightspeed. In addition to doing trade shows as well for European Hospitality. We also did lightspeed edge, which was the customer event. That's one of many customer events, we have planned.

Both sides of the pond for retail it would be a hospital and you know just connecting with the thought leaders and influencers and and prospects customer prospects in these markets through critical brand marketing, there's definitely a halo effect.

Dax Dasilva: Just connecting with the thought leaders and influencers and prospects, customer prospects in these markets through vertical brand marketing, there is definitely a halo effect that is both for outbound and for inbound channels. That is what is going to fuel our acceleration in customer location count over the coming quarters.

That's a that's that's both outbound and inbound channels.

That's how we see what's going to fuel our acceleration in customer location count over the over the coming quarters.

Van: Your next question comes from the line of Josh Baer from Morgan Stanley. Please go ahead.

Your next question comes from the line of Josh buyer from Morgan Stanley. Please go ahead.

Speaker 9: Great, thanks for the question, and congrats on a great quarter. Dax, a two-parter on AI. I just wanted to ask how you expect AI to impact retail and hospitality at a high level. Then second, what is Lightspeed's AI strategy?

Great. Thanks for the question and congrats on a great quarter taxes, a two parter on a I just wanted to ask how you expect AI to impact retail and hospitality.

At a high level and then second what is lightspeed.

Strategy.

Dax Dasilva: Yeah, so I think AI is certainly contributing to the progress that we've made in efficiency in Q1, and it's a continuation of what we saw last fiscal year. We use AI at Lightspeed primarily to automate the repetitive and predictable tasks and also to drive insights for the business. From a Lightspeed company perspective, we've deployed AI across support. Almost 70% of chat interactions are now answered by AI. It's being implemented across our sales funnels as we scale our sales organization. Development teams are using copilots to increase efficiency and velocity. So we've seen a lot of benefit from that with more to come. From the product side, we're excited to have released AI features all throughout last year. We have a very high velocity across our development teams.

Yeah. So I think he is certainly contributing to the progress that we've made in efficiency in Q1.

The continuation of what we saw last fiscal year, we use AI at light speed, primarily to automate the repetitive predictable test and also to drive insights for the business. So you know from a Lightspeed company perspective, we've deployed AI across support almost 70% of chat interactions are now.

Answered by AI.

Being implemented across our sales funnels as we scale our sales organization development teams are using co pilots to increase efficiency and velocity. So you've seen a lot of benefit from that with more to come from.

From the product side, we're excited to have released AI features all throughout last year, and we have a very very high velocity across our development teams. Some examples are.

Dax Dasilva: Some examples are AI Web Builder for our e-com product, using generative AI, as well as Benchmark and Trends, an AI-powered tool for hospitality, as well as tools to enhance photos, configure menus, write product descriptions in e-com. Throughout the product, I think we can save merchants' time. At the end of the day, retailers and restaurateurs go into these businesses because they're passionate about cuisine, they're passionate about the vertical that they're in in retail, and all of the back-end admin tasks. They didn't join these businesses or start these businesses to administrate Lightspeed's back office. That's where AI can come in and really remove some of the repetitive tasks and give them more leverage to add value where they best add value to their businesses.

AI web builder for our E comm product generate using generative AI as well as benchmark and trends and AI powered tool for hospitality.

As well as as tools to enhance photos can figure menus.

Right product descriptions.

Throughout the product I think we can save merchant's time.

At the end of the day retailers and restaurants years go into these businesses because they are passionate about.

Cuisine, they are passionate about the vertical that they're in and retail and all of the the backend admin.

Admin tasks that they.

They didn't they didn't join these businesses are started these businesses too to administrate Lightspeed is back up and back office, and that's where AI can come in and really removes some of the.

Some of the repetitive tasks and give them more leverage too to add value, where they best add value to their businesses.

Speaker 9: OK, thank you.

Okay. Thank you.

Van: Your next question comes from the line of Timothy Chiodo from UBS. Please go ahead.

Your next question comes from the line of <unk> <unk> from UBS. Please go ahead.

Yeah.

Speaker 9: Great, thank you for taking the question. Dax, I think you mentioned earlier that for the investment behind sales, you are already at 130 of the 150. You also mentioned some of the timeline to get productive, and many of those are ramping up and takes about six months or so to hit those quotas. I was wondering if you could talk a little bit about those quotas, meaning are we talking about locations per month? If you could put some rough numbers around what the expectations are, is it based on volume brought in? Is it based on an expected lifetime value or gross profit levels? Or any other metrics that you could put around what the expectations are on a per sales representative basis? Thanks a lot.

Great. Thank you for taking my question. So tax I think you mentioned earlier that for the investment behind sales Youre already at $1 30 of the 150, you also mentioned.

Some of the timeline to get productive and many of those are ramping up and it takes about six months or so to hit those quotas I was wondering if you could talk a little bit about those quotas, meaning are we talking about locations per month, and if you could put some rough numbers around what the expectations are is it based on volume broadband is it broad based on an expected lifetime.

<unk> or gross profit levels or any other metrics that you could put around what the expectations are on a per sales representative basis. Thanks a lot.

Dax Dasilva: Yeah, I'll just start by saying outbound is a super successful way for us to target and win those high GTV customers. We expect to see strong unit economics and payback ratios in our growth markets for reps that are fully ramped. I'll let Jean-David jump into a little bit of what we expect from each ramp. Ultimately, every single outbound rep is measured in a very diligent way. We look at a number of demos booked, a number of demos attended, and bookings per month. Then we triangulate the bookings back to the cost of the motion. What we're really pleased to see is that we continue to see the same strong payback ratios that we saw last year. Even if we're hiring a lot more reps this year, we're very, very focused on that payback and efficiency metric, and we continue to see the progress there.

Yeah, I'll, just start by saying outbound super successful way for us to target and win those high GDP customers, we expect to see strong unit economics and payback Roche ratios in.

In our growth markets for reps that are fully ramped I'll, let judy jump into a little bit of the what.

What we expect from each rep.

Yeah, ultimately every single outbound rep.

Is measured in the valley, a very diligent way, we look at a number of demos booked number of demos attended and bookings per month, and then we triangulate the bookings back to the cost of the motion and what we're really pleased to see is that we continue to see the same strong payback ratios that we saw last year.

<unk> even.

Even if we're hiring a lot more reps. This year were very very focused on that payback and efficiency metric and we continue to see the progress there. So.

Dax Dasilva: We're very, very enthusiastic with the progress we're making across the board, not just in Amelia Hospitality, but also Noam retail with our outbound efforts.

You know, we're very very enthusiastic with the progress we're making across the board not just in EMEA hospitality, but also no I'm retail with with our outbound effort.

Speaker 9: Perfect, thank you. As a related follow-up, if you could just recap some of what those expected either payback periods are and/or the LTV to CAC levels that are sort of expected from this initiative.

Perfect. Thank you and as it related follow up if you could just recap what those expected either payback periods are.

<unk> the LTV to CAC levels that are sort of expected from this initiative.

Dax Dasilva: Yeah, we've seen last year high single-digit, low double-digit payback ratios, so months payback on the cost of the motion. We continue to see that when we look at ramp reps. Best in class as far as what we see in SaaS. That's what we're hyper-focused on, and we continue to see that.

Yeah. We are we've seen last year, a high single digit low double digits, a payback our ratios. So a month's payback on the cost of the motion and we continue to see that when we look at Ram perhaps.

Best of best in class as far as what we see in in SaaS and so that's what we're hyper focused on and we continue to see that.

Van: Your next question comes from the line of Tien-Tsin Huang from J.P. Morgan.

Your next question comes from the line of Tien Tsin Huang from Jpmorgan.

Okay.

Speaker 6: Hi, thanks. Good results here. I just wanted to ask for you, Dax, just thinking about products and product velocity. I know it is a big theme for the sector right now. What products are attaching well from the last 12 months? What are you excited about next that is coming out? I am just curious what is on the product pipeline.

Hi, Thanks, Good results here I just wanted to ask for <unk>, just thinking about products.

Product philosophy, and there was a big theme for the sector right now and what products are attaching well.

From the last 12 months what are you excited about.

Next.

Coming out I'm, just curious what's on the product pipeline.

Dax Dasilva: Yeah, I mean, we are really excited on both the retail front and the hospitality front. On retail, we have seen a lot of success with Lightspeed Advanced Insights. These are insights into how to turn inventory so businesses can be more profitable. We approach that from the in-store level, but also from the ordering side. I mean, that is something really unique about the Lightspeed Retail offering is how we integrate with Lightspeed New Order. We are really starting to see benefit from that integration with Lightspeed New Order in our key eight verticals because no other competitor offers that end-to-end solution for inventory. You will see a lot of acceleration in terms of product roadmap around inventory from the store level and also from ordering for brands. A lot of our announcements this quarter are around inventory and around Lightspeed New Order.

Yeah, I mean, we're really excited on both the retail front and the and the hospitality fronts on retail we've seen a lot of success with insights.

This is these are insights into how to turn turn inventories so businesses can be more profitable.

We approach that from the in store level, but also from the ordering side I mean, that's something really unique about the lightspeed retail offerings. What is how we integrate with new order, we're really starting to see benefit from that integration with new order in our key verticals because no. Other competitor offers that end to end solution for inventory and so.

So there is you'll see a lot of acceleration in terms of product roadmap.

Inventory from the store level and also from ordering for brands a lot of our announcements this quarter around inventory and around new order.

Dax Dasilva: You will see we are attracting really, really big brands and really big retailers to the solution as a result. Expect to see more in that direction on the retail side. More, since we have a wealth of data, more AI-powered insights to capitalize on the unique position that Lightspeed Commerce Inc. has in this ecosystem for those verticals. On the hospitality side, we have an amazing suite effect. That means we have a great tool to serve customers with Lightspeed Tableside. Lightspeed Kitchen Display System coordinates the kitchen side, and then our Pulse app is the third part of the solution. That is for the management administration layer. That is a really unique set of features that we are building upon. We are adding AI insights to.

And you'll see we're attracting really really big brands and really.

Big retailers to the solution as a result and.

And so expect to see more in that direction on the retail side and.

And more since we have a wealth of data more AI powered insights to capitalize on the unique position that lightspeed has in.

This ecosystem for those for those verticals on the hospitality side, we have an amazing sweet effect to.

So that means we have a great tool to serve customers with lightspeed tableside KBS, our kitchen display system coordinates the kitchen side and then our pulse App is the third part of the solution in that.

As for the management administration layer and that's a that's a really unique set of features that we're building upon we're adding AI insights to that that are that we have some really really exciting things in the roadmap to really just take what we have which is the industry leading solution and Pan European solution.

Dax Dasilva: We have some really, really exciting things in the roadmap to really just take what we have, which is the industry-leading solution and Pan-European solution, the only Pan-European solution for hospitality, and just continue to build out that lead with further enhancements to this incredible suite.

The pattern European solution for hospitality.

And just continue to build out that lead.

With further enhancements to to this incredible suite.

Speaker 9: Great, that's good. Thanks for that. Just my quick follow-up, I know Tim asked about the sales growth and productivity. I am curious, are there any updates on leveraging indirect sales or selling through partners?

Okay, Great. That's great. Thanks for that just my quick follow up I know Tim asked about the sales.

Growth and productivity.

I'm curious if there's any update thoughts on leveraging indirect sales or selling through.

Partners.

Dax Dasilva: Yeah, I think partnerships is the third part of the puzzle. Inbound is where Lightspeed has been traditionally really, really strong. We are investing a lot in outbound, but we are still growing inbound. Inbound has also seen a 15% halo effect from all of our investment in outbound and vertical brand marketing. The partnerships is the third part of the puzzle. That is an area of the business that over the coming years is going to see a big contribution a lot to the overall revenue. I will let Jean-David talk a little bit more about what we are doing there. Yeah, to build on Dax's answer, we have always actually been strong in partnerships since day one when the product was originally built on the retail side. That was a big channel for us. Here we leverage two types of partners.

Yes, I think partnerships are is the third part of the puzzle outbound inbound is where <unk> been traditionally really really strong we're investing a lot in growing in outbound, but we're still growing growing inbound.

<unk> also seen a 15% halo effect from all of our investment in outbound and vertical brand marketing the partnerships as a third part of the puzzle.

That's a that's an area of the business that that will that over the coming years is going to see.

A big cut it will contribute a lot to the overall revenue and I'll, let Judy talk a little bit more about what we're doing there.

To build on taxes answer we've always actually been strong and partnerships since day, one when the when the product was originally built on the retail side, there was a big big channel for Us.

Here, we leveraged two types of partners. So we have referral partners thats in leads to our team internally that we closed and we also have a strong reseller network, particularly in Europe.

Dax Dasilva: So we have referral partners that send leads to our team internally that we close, and we also have a strong reseller network, particularly in Europe. Obviously, a strong focus this year is on outbound, given our ability to target high GTV ICP customers. You can expect that we will continue to see growth as well from partnerships, and that will be a story for years to come too.

Obviously, a strong focus this year is on an outbound given our ability to target high G. T V. ICP customers, but you can expect that we'll continue to see growth as well from partnerships and that will be the story for years to come too.

Van: Your next question comes from the line of Dominic Ball from Rothschild. Please go ahead.

Your next question comes from the line of Dominic Ball from Rothschild. Please go ahead.

Speaker 8: Hi, guys. Thank you very much for my question. Great numbers on GTV growth. It is the best since it has been around about Q2 of 2022. As an understanding for sort of the balance for what is driving this growth, it seems to be a mixture of sort of improved same-store sales, more outbound sales, which then also help inbound, and then potential cross-selling from New Order as well. Is there any, just to help us understand it better, is there any one channel there that is driving incremental GTV over the others?

Hi, guys. Thank you very much for my question Great numbers on GTA V growth since the best since it seems to be around about Q2, 2022 sorry.

I don't understand a foothold a pause for what's driving this growth.

It seems to be a mixture also of improved same store sales more outbound sales, which then also helped inbound and then potential cross selling from new orders as well is there any I'm just helps on our side. It's not just any one channel that's driving incremental G. T V over the others.

Dax Dasilva: Well, you know, I think overall GTV grows when we grow locations. That is, I think, one of the key drivers. We grew GTV 4% overall, but in the growth market, we grew GTV 12%. So in our growth engines, where we are adding locations and where we are investing, GTV is growing even faster. I will let Asha Bakshani dive a little bit deeper into some of the dynamics around GTV.

Well I think overall GDP grows when we grow locations.

And so that's I think one of the.

One of the key drivers are.

We grew we grew <unk>, 4%.

Overall, but in the growth market, we grew 12.

12%.

So in our growth engines, where we're adding locations and where we're investing GBP is growing even faster.

I'll, let asher dive a little bit deeper into and to some of the dynamics around GCB, yes sure. Thanks for the question Dominic So just to add on to what Jack said you know the GTA V grows is coming primarily from the growth portfolio, given how well we're doing on locations. There. If we look at North America retail versus EMEA.

Asha Bakshani: Yeah, sure. Thanks for the question, Dominic Ball. Just to add on to what Dax Dasilva said, the GTV growth is coming primarily from the growth portfolio, given how well we are doing on locations there. If we look at North America retail versus Amelia Hospitality, we are seeing stronger growth in Amelia Hospitality, in particular from a same-store sales perspective. There are also several verticals in retail that have been quite strong this quarter. So we are seeing bike come back to single digits, positive single digits from being down for several quarters. We are seeing toys, for example, have a very strong same-store sales quarter in retail. Several verticals in Noam retail are doing very well, but quite a bit of the growth did also come from Amelia Hospitality.

Hospitality.

Seeing stronger growth in EMEA of hospitality in particular from a same store sales perspective.

But there are also several verticals in retail that had been quite strong. This quarter. So we are seeing bike come back to the single digits positive single digits from being down for several quarters.

We're seeing you know toys for example have a very strong same store sales quarter in retail so several verticals and nor am retail are doing very well.

But quite a bit of the growth did also come from EMEA hospitality.

Speaker 8: That's great. If I can just sneak one more in, if that's OK, there seems to be maybe a little bit of a step up in investment from peers right now. In the U.S. retail POS market, Clover is stepping up their sales and marketing. Shopify is investing more. In the European restaurant market, Shift 4 and Global Blue, Toast, One Day Opry, expand there as well. Do you expect maybe a little bit of a higher cost of growth from here onwards as well?

That's great and if I can just sneak one more in if that's okay that seems to be maybe a little bit of a step up in investment from peers right now so in the U S. Retail Pos market close stepping up themselves are marked them shopify is investing more into.

In the European restaurant market shift full on global Blue.

One day before you expand there as well so do you expect maybe a little bit of a hard close through growth fall from here almost as well.

Dax Dasilva: Yeah, certainly there is always going to be competition in the market. We are hyper-focused on our particular verticals, the eight key verticals in North America retail and the key cities in Europe where we are expanding our European hospitality customer base. I think we have a good differentiated position in these markets, and we are going after a particular customer that is higher GTV than a lot of these competitors. There is a lot of names in the space, but there is a lot of different segmentation in retail and hospitality. That is what we built our strategy on, and that is where we have the ability to have real customer wins.

Yes, certainly there is there is always going to be competition in the market. We're hyper focused on our particular verticals. The eight key verticals in North America retail ad.

The key cities in Europe, where we're expanding our European hospitality.

Customer base.

I think we have a good differentiated position in these markets and we're going after a particular customer that has higher GTA V than a lot of these competitors. There's a lot of names in the space, but there's there's there's a lot of different segmentation in retail and hospitality.

And so that's that.

That's what we built our strategy on <unk>.

That's where we have the ability to have real customer wins.

Okay.

Van: Your next question comes from the line of Kevin Krishnaratne from Scotia. Please go ahead.

Your next question comes from the line of Kevin Crissey not out now from Scotia, Let's go ahead.

Speaker 6: Hey there, thank you. Good morning. First question, you mentioned in the growth markets that ARPU outpaced the broader average. How about software ARPU? How is that trending? I guess related to that, your 9% software revenue that you printed, how do you think about how that evolves over the coming quarters in the context of your 10% to 12% total revenue guidance?

Hey, there. Thanks. Good morning first question you mentioned are in the growth markets that <unk> outpaced the broader average how about.

Software or how is that trending and I guess related to that your 9% software revenue that you that you printed how do you think about you know how that evolves over the coming quarters in the context of your at 10% to 12% total revenue guidance.

Asha Bakshani: Thanks for the question, Kevin. Software in the growth portfolio, software ARPU was higher than in the efficiency or the rest of the world portfolio, just by virtue of the fact that the primary product in our growth portfolio are our flagships in Lightspeed Hospitality and Lightspeed Retail, and that's where all the product innovation is happening. When you think from a software module attached perspective, we're seeing much higher software ARPU in the growth portfolio. But consolidated, we're seeing a 10% growth year over year, which is still very healthy. From a software growth perspective, the 9% year over year, we're very pleased with that growth. We do expect that growth to continue to improve. We just need to keep a few dynamics in mind, such as price increases midway through the year last year. At the same time, we're expecting outbound to continue to ramp.

Yeah. Thanks, Thanks for the question Kevin.

So yes software in the gross portfolio software ARPA was higher than in the efficiency or the rest of world portfolio. Just by virtue of the fact that you know the primary product and our growth portfolio are our flagships.

In EMEA, our hospital no I'm retail and that's where all the product innovation is happening and so when you think from a software module attach perspective, we're seeing a much higher software ARPA in the growth portfolio, but consolidated we're seeing a 10% growth year over year, which is still very healthy from a software growth perspective, the 9% year over year.

We're very pleased with that with that growth. We do expect that growth to continue to improve we just need to keep a few dynamics in mind, such as price increases midway through the year last year, but at the same time, we're expecting outbound to continue to ramp. So we expect our software growth to continue it's not going to.

Asha Bakshani: So we expect software growth to continue. It's not going to happen overnight, as Dax Dasilva mentioned earlier, but over time, absolutely.

[noise] happen overnight as Dax mentioned earlier, but over time absolutely.

Speaker 6: Thank you for that, Asha Bakshani. The second question you mentioned, double-digit same-store sales growth in Europe might have helped there. Just on your overall top-line revenue, 15%, do you have a number of what your revenue growth would have been on a constant currency basis?

Okay. Thank you for that action. The second question you had mentioned.

Double digit same store sales growth in Europe, FX might help there just on your overall topline revenue, 15% do you have a number of what your revenue growth would have been oh.

On a constant currency basis.

Asha Bakshani: I would say a couple of points under that. It wasn't too much of an impact because European hospitality, when you think about 100% of the Lightspeed revenue, is not the most significant part. But it definitely did help the top line. So I would say FX is a couple of percentage points on the 15%.

Yeah. It was.

I'd say a couple of points under that it wasn't too much of an impact because European hospitality. When you think about a 100% of the lightspeed revenue is not you know the most significant part, but it definitely did help the topline. So I would say FX is a couple of percentage points on on the 15%.

Van: Your next question comes from the line of Koji Ikeda from Bank of America. Please go ahead.

Your next question comes from the line of Koji Ikeda from Bank of America. Please go ahead.

Speaker 6: Yeah, hey guys, thanks so much for taking the question. I wanted to ask you, maybe take a huge step back, and ask you a bit of a more philosophical question of how you are thinking about growth and profitability, really your focus on profitable growth. It does feel like we are heading into a period of more certainty with regulatory noise, especially around tariffs, and maybe even a potentially better macro over the next 12 months. I know you are hyper-focused on profitable growth, but how do you balance that against a potentially improving demand environment? I mean, I guess the question here is, how do you make sure you are not leaving anything on the table?

Yeah, Hey, guys. Thanks, so much for taking the question I wanted to ask you maybe took a huge step back and ask you a bit of a more philosophical question of how you're thinking about growth and profitability.

We really are focused on profitable growth.

And so it does feel like we're heading into a period of more certainty with regulatory noise, especially around tariffs.

Maybe at or maybe even a potentially better macro over the next 12 months or so.

I know you're focused.

<unk> focus on profitable profitable growth, but how.

How do you balance that against the potentially improving demand environment.

The question here is how.

How do you make sure you're not leaving anything on the table.

Dax Dasilva: Yeah, I think that's a great question. I think our strategy is designed so that we are not leaving anything on the table. We're investing a tremendous amount in growing outbound, ramping outbound. It's going to take time, but we're already seeing results, as well as product investments to grow that competitive mode. I think you're right. I think that we've seen the macro stabilize, although there is volatility and tariffs are a factor. We've also seen the retailers in our customer base that order, that import their inventory. We've seen them have strategies, often using Lightspeed New Order to manage their suppliers. They have strategies to manage that since the beginning of the year. I think that for us, we have an aggressive growth strategy from our perspective.

Yes, I think that's a great question.

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I think our strategy is designed so that we are not leaving anything on the table.

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We're investing a tremendous amount in and growing outbound ramping outbound it's going to take time, but we're already seeing results as well as product investments to grow that competitive moat.

I think that.

I think youre right I think that we've seen the macro stabilize although there is volatility.

And tariffs are a factor, but we've also seen the retailers.

In our in our customer base that that order that imports their inventory we've seen them have strategies.

Often using lightspeed in order to manage their suppliers they have strategies to manage that since the beginning of the year right. So I think that.

For us.

We are we have an aggressive growth strategy from our perspective, I think what we're what we're able to show with these results is that we're able to make those investments in the growth engines funded by our efficiency markets make significant investments our product and technology investments.

Dax Dasilva: I think what we're able to show with these results is that we're able to make those investments in the growth engines funded by our efficiency markets make significant investments. Our product and technology investments more than $50 million more this year, and we've never had a ramp like this in our sales organization in our history in this short amount of time. I think all of those exercises are new for Lightspeed in terms of their scale, but they're going to give us confidence to plan further growth initiatives that are as aggressive in future years. We're in a three-year transformation. This is our year-one plan, and we're always cognizant that we want to capture as much demand as possible and grow market share and have as many customer locations as we can.

More than $50 million more this year and we've never ramped.

No.

Had a ramp like this in our sales organization and our history in this short amount of time.

I think I think all of those exercises.

New for light speed in terms of their scale.

But theyre going to give us confidence to plan more.

The plan further growth initiatives.

Initiatives that are as aggressive in future years, where the three year transformation. This is our year one plan.

And where we are we're always cognizant that that we want to capture as much demand as possible and grow market share and have as many customer locations as we can.

Speaker 6: Thanks, Dax. Thanks, Dax, all from me. Thank you.

Thanks, Dan. Thanks, that's all for me. Thank you.

Van: Your next question comes from the line of Todd Coupland from CIBC. Please go ahead.

Your next question comes from the line of Todd Coupland from CIBC. Please go ahead.

Speaker 6: Good morning, everyone. A lot of questions on growing the rep count. I am just wondering, when you get to the 150 and they are performing at your targeted levels, does that get you into that 10% to 15% location growth, or would you need to build on that team?

Hi, Yes, good morning, everyone.

A lot of questions on growing the rep count.

I'm just wondering when you get to the $1 50, and they are performing at your targeted levels does that get you into that 10% to 15%.

<unk> location growth or would you need to build on that team.

Dax Dasilva: The 10% to 15% CAGR is a three-year CAGR. We do expect our 5% at the end of Q1 to converge to 10% to 15% between now and fiscal 2028. As these reps ramp, you are going to see acceleration in the customer location growth and that growth number.

Yes, the 10% to 15% CAGR is a three year CAGR.

Yeah, we do expect that our 5%.

At the end of Q1 to converge to 10% to 15%.

Over between now and fiscal 'twenty eight.

But yeah as these reps ramp youre going to see acceleration in.

In the customer location growth.

That growth number.

Speaker 6: My second question has to do with payments attached and the very strong transaction growth. That seemed a little bit stronger than expected. Was that a favorable mix relative to where Lightspeed Payments are attached, or are you attaching at a higher rate and we should expect that to actually trend even higher as we go through the year? Just talk about expectations there. Thanks a lot.

Okay.

And my second question.

It has to do with payments attach and the very strong transaction growth.

That seemed a little bit stronger than expected was that a favorable mix relative to where lightspeed payments are attached or are you attaching at a higher rate and we should expect that to actually trend.

Even higher as we go through the year just talk about expectations. There. Thanks a lot.

Asha Bakshani: Yeah, thanks, Todd. I'll take that one. The penetration rate at the end of Q1 or in Q1 was quite healthy. We saw a 6% growth year over year. That's really a result of solid execution on our part. Every eligible customer must take payments now, as you know. Payments penetration is a function of what's happening in the underlying macro. The payments penetration rate, rather than being a measurement barometer for performance, is more an opportunity metric. That's the opportunity in front of us, what's not yet monetized. We're very excited about where payment penetration is going. We expect that March upwards to continue. Depending on what's happening in the underlying macro, the rates vary quarter to quarter, but very, very confident in an upward trajectory here.

Yeah, Thanks, Todd I'll I'll take that one so the penetration rate at the end of Q1 or in Q1 was quite healthy.

6% growth year over year, that's really a result of solid execution on our part every eligible customer must take payments now as you know.

But also payments penetration is a function of what's happening in the underlying macro and so you know the payments penetration rate rather than being a you know a barometer.

Our measurement barometer for performance is more an opportunity metric like that's the opportunity in front of us what's not yet monetized, but we're very excited about where payment penetration is going we expect that march upwards to continue.

You know depending on what's happening in the underlying macro you know the rates vary quarter to quarter, but very very confident in an upward trajectory here.

Dax Dasilva: One thing to add is that in our efficiency markets, we're only 35%.

One thing to add is that in our fixed.

Our efficiency markets.

We're only 35% penetrated due to non competes.

Jean-David Saint-Martin: penetrated due to non-competes. We are going to focus on growing the payment penetration in that market. There is no real impediment to getting to the corporate average there. I think that will get some attention from us and drive the overall rate.

And so we are going to focus on growing the payment penetration in that market.

So theres no real impediment to getting to the corporate average there I think that.

That we will get some attention from us and drive the overall rate.

Van: Your next question comes from the line of Raimo Lenschow from Barclays. Please go ahead.

Your next question comes from the line of Raimo <unk> from Barclays. Please go ahead.

Gus Papageorgiou: Perfect. Asha Bakshani, can I stay on that one? If you think about that, it's, as you said, payment penetration is more an output. The 35% is obviously like a low point that you can go further. How much of a, if you think about it, how should we think about then, on a more quarterly level, how to kind of drive that higher? Is that something there, that we look at milestones when non-competes come out and then, you know, there's going to be a step change or like, how do you see that evolving, this year and going forward?

Perfect.

I'm, sorry can I stay on that one if you think about that it's as you said payment penetration as more of an output.

And the 35 is obviously like a low point that you can go forever.

How much of a if you think about it like how should we think about then.

More quarterly level like how to kind of drive that higher is that is that something.

With that we look at milestones wherein a noncompete has come out and then there's going to be a step change or like how do you see that evolving this year and going forward.

Dax Dasilva: Yeah, thanks. Thanks for the question, Raimo Lenschow. I think we're, you know, the way we should think about it is a gradual improvement quarter to quarter. There's going to be, you know, non-competes rolling off. There's going to be more opportunity in one region versus another. And then there's the dynamics of the underlying GTV. So I would say, you know, from a modeling perspective, gradual improvement quarter to quarter is what we should expect.

Yeah. Thanks, Thanks for the question Raimo.

Think where you know the way, we should think about it as a gradual improvement quarter to quarter.

There's going to be you know noncompete is rolling off there is going to be more opportunity in one region versus another and then there was the dynamics of the underlying G. TV. So I would say from a modeling perspective gradual improvement quarter to quarter as what we should expect.

Gus Papageorgiou: Perfect. Then one for Dax, obviously the world is changing with GenAI. Search as a way for e-commerce guys to kind of get their business done is maybe changing and we are doing more ChatGPT, et cetera. How, I mean, you talked earlier about how you are kind of using AI, but it sounded more like internal. How do you think about you need to change and your retailers need to change to kind of do well in this new world?

Okay, Perfect and then one for tax obviously the world is changing with Gen AI.

Search as a way for e-commerce, guys to kind of get their business done is kind of maybe changing and were doing more jet GPT et cetera.

I mean, you talked earlier about like how you're kind of using AI, but it sounded more like internally. How do you think about like you you need to change and in your retailers who need to change.

<unk> do well in this new world.

Jean-David Saint-Martin: Yeah, I mean, certainly I did cover a little bit about what we are doing on the product side. So that is really enabling our merchants, whether they are retailers or restaurateurs, to save time in the backend. So that is, you know, being able to generate a website using AI that is already in our retail product, as well as doing photo enhancement, you know, image, sorry, product descriptions on the hospitality side, configuring menus, which can be onerous. And we have a tool called Benchmarking Trends in Hospitality that is powered by AI that lets you as a restaurant compare your menus, your results, your staffing, to other, you know, to other restaurants in the neighborhood so that you have the right pricing, the right staffing. So I think it is going to transform the way that retailers and restaurateurs operate their business.

Yeah, I mean, certainly I did cover a little bit about what we are doing on the product side. So that is really.

Enabling our merchants whether their retailers are restauranteurs to save time in the backend.

So thats being being able to generate a website using AI that's already in the in our retail products as well as doing photo enhancement.

Image, sorry product descriptions on the on the hospitality side, configuring menus, which is which can be onerous.

And we have a tool called benchmarking trends in hospitality, that's powered by AI that lets you as a restaurant compare your your your your menus your results your staffing to other.

The other restaurants in the neighborhood. So that you have the right pricing the right staffing.

I think it's going to transform the way that that retailers and restaurants are as operate their business I think it's going to give them more leverage allow them to be more profitable and allowed them to spend less time on the low value.

Jean-David Saint-Martin: I think it is going to give them more leverage, allow them to be more profitable, and allow them to spend less time on the low value, you know, portion of their business in terms of, you know, what takes up their time and in terms of admin, and spend more time on the high value, differentiated things that they do, in regards to curating product, you know, curating menus, and the things where they add the most value as entrepreneurs.

Portion of their business in terms of what takes up their time and in terms of admin and spend more time on the high value differentiated things that they do in regards to curating product.

Curating.

Menus and things, where they add the most value as entrepreneurs.

Okay.

Van: Your final question comes from the line of Richard Tsai from National Bank Financial. Please go ahead.

Your final question comes from the line of Richard <unk> from National Bank Financial. Please go ahead.

Asha Bakshani: Oh, thanks for squeezing me in here. With respect to your wins in your target markets, can you give us maybe a sense of the mix of those wins from newly formed businesses versus established merchants? On the latter here, is that still largely displacing the incumbents?

Oh, Thanks for squeezing me in here.

With respect to your wins in your target markets can you give us maybe a sense of the mix of those wins from newly formed businesses versus established merchants and on those later here.

Is it still largely displacing the incumbents.

Jean-David Saint-Martin: Yeah, I'll pass that to Jean-David Saint-Martin.

Yeah peso, it's J D honestly Richard Thank you for the question Richard the trend remains very similar to our answer last quarter. So as far as displacements. What we see is about a third a third a third so we displaced.

Asha Bakshani: Yeah, honestly, Rich, thank you for the question, Richard. The trend remains very similar to our ends for last quarter. As far as displacements, what we see is about a third, a third, a third. So we displace a third from legacy providers in the space, a third from more, let's say, modern peers. Then we also see a third coming from new business formation. We continue to see that trend. Obviously, as I have highlighted with the strategy, we are hyper focused on the key verticals in non-retail, and even hospitality. We expect that trend to continue as we continue to focus on those segments. Okay. My second question, you have been incredibly aggressive on capital allocation on the buyback side. Obviously, with the scaling profitability here, should we expect that pace to continue through the rest of this year?

Third from from legacy providers in the space.

For more let's say modern peers.

And then we also see a third coming from new new business formation.

And so we continue to see that trend obviously is as I highlighted with the strategy. We're hyper hyper focused on the key verticals and non retail.

In EMEA hospitality.

And so we expect that trend to continue as we continue to focus on those on those segments.

Okay and my second question.

<unk> been incredibly aggressive on capital allocation on the buyback side.

Obviously with the scaling profitability here should we expect that pace to continue through the rest of this year.

Dax Dasilva: Yeah, thanks for the question. We have completed our NCIB, our normal closed issuer bid for this fiscal year. That was done in the first quarter. We returned about $86 million to shareholders in the quarter. With respect to future buybacks, we are going to continue to remain opportunistic. There are other avenues with which we can continue to buy back outside of an NCIB. We are going to remain opportunistic and, you know, we still have $200 million left on our board authorization. So we will have a look at what is happening in the market and make sure that, that, you know, we take advantage of the opportunity when and if it arises.

Yeah, Yeah. Thanks for the question.

We have completed our NCI would be our normal course issuer bid for this fiscal year.

That was done in the first quarter, we returned about $86 million to shareholders in the quarter.

With respect to future buybacks, we're going to continue to remain opportunistic there are other avenues with which we can continue to buy back outside of an N. CIB, we're going to remain opportunistic and we still have $200 million left on our board authorization. So we'll we'll have a look at what's happening in the market and make sure that that.

We take advantage of the opportunity when and if it arises.

Van: I will now turn the call back over to Gus for closing remarks.

I will now turn the call back over to Gus for closing remarks.

Jean-David Saint-Martin: Thank you, Van. Thanks, everyone, for joining us today. If anyone has any further questions, please reach out to myself. I will be around all day. We look forward to speaking to you at our next conference call. Have a great day, everyone.

Thank you Dan Thanks, everyone for joining us today, if anyone has any further questions. Please reach out to myself will be around all day.

And we look forward to speak to you at our next conference call and have a great day everyone.

Van: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.

Speaker 6: Please wait. The conference will begin shortly.

Please wait the conference will begin shortly.

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